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A Dose of Rakesh Jhunjhunwala

Rakesh Jhunjhunwala on Future of Equity Market

Methinks every Indian Equity Investor needs a dose of Rakesh Jhunjhunwala (RJ) every few years! ~ any sooner it could be an Overdose !¬† ūüėÜ ~ just kidding !

I like the guy ! ~ right since I interacted with him when I invited him around 15 years ago at the turn of this century for interacting in an evening  Q & A session with my packed class of @ 90 participants in my Equity Portfolio Structuring and Stock Analysis Workshop at the BSE Training Institute as I thought he would add practical value & he did

“Boss ! I’m a¬†Sadak Chaap¬†! ” ¬†he had told us then as also how he had reconstructed his equity portfolio to concentrate only in a few stocks after the 2000 ICE debacle…so in a sense most of his Wealth has grown only in this Millennium in the past 15 years ~ and to his credit in Selections that were not really Blue Chip or Core

Yesterday had gone for an ¬†IMC interactive meet in Mumbai to check out if RJ has sobered & matured in his ‘manner of speak’ over the years ~ I rarely watch Stock Channels ~ don’t even have a TV in office~ ¬†so was not really conversant with how & what he delivered in his appearances though knew of his initiating big stakes in companies

I am delighted to blog he has not changed ! ~ shot straight from the hip & mouth again as he always does ” I’m a¬†satodia(translated to mean speculator)¬†¬†& investor & not an economist” ~ his investment portfolio has spread into the Alternatives of ¬†Bollywood Movie Production too with Kareena & Arjun starrer ‘Ki & Ka’ being his latest co production~ is into horse racing too and owns a few horses ~ passions perhaps where return on investments need not be measured in monies !?

Many perceive him as¬†Dehati¬†or Crude Dude for his rustic loud boorish way of speech~ but don’t let it fool you ! & he does not make any pretenses ~ he’s a CA by training & wears a fairly sharp mind

Money Talks & Crowd Laps it up all !~ many vigorously & ‘knowledgeably’ nodding in agreement

These RJ’s views & responses to questions posed should interest you :

On The Future of Equity Markets ~ Reiterates this is only the Trailer & we are going to witness a Mother of all Bull Runs.India is a thriving young Democracy with US $ 600 b in Savings every year.Equity Markets receive just US $ 50 b from this.This has to improve and it will ~ anyone ,any  doubt!?   

On Returns from Equity  ~ Ironically while his riches have been through multibagger 1000% + equity gains in concentrated high weightage stocks like Titan & Crisil he asserts that one should be happy with 18% CAGR gains and if it goes to 24% one should be really happy read more

Sensex disappoints in FY 16 as many of the 30 constituents lose big value

FY 16 has been a mixed year for Stocks with Markets on a downward drift  with  Sensex closing 9.4% lower  at 25341

Sensex disappoints in FY 16 as many of the 30 constituents lose big value 

Interesting & Heartening to it’s Shareholders ,Reliance has been the biggest constituent gainer at @ 27% while at the other end BHEL has lost half it’s value at 51% ! ¬†~ another 11 companies have lost between @ 19% to 30 % values

Domestic Concerns revolved around  second consecutive failure of monsoon in 2015 &  slow pace of Reforms  & Corporate Earnings Lethargy with growth in single digits despite boasts of GDP Growth of over 7% and lower Inflation and Oil Price falling 40%

Global Concerns revolved around ¬†China’s Growth slowing down considerably & It’s Stock Markets losing a lot of it’s froth in panic falls, continuing recession in Europe & expectations of the US Fed raising rate

Consequently FPI Inflows which were a record US $ 17 b in FY 2015, reversed to outflows of US 2.1 b in FY 16.These outflows would have been higher if last month March 2016  had not seen a reversal back to FPI Inflows of US $ 3.2 b 

In the first three months of this Calendar Year 2016 , January &  February 2016 witnessed significant outflows of US 1.67 b & US $0.8 b respectively that dropped Sensex to 23000 levels.On the back of many countries like Japan,Switzerland and Sweden embarking on Negative Interest Rate Policy,the  US Fed send out dovish signals and has delayed Rate hikes.This saw FPI Equity Inflows smartly cross US $ 3 b in  March 2016  getting them back into the Green in 2016 & revive the Sensex back up @ 10% to 25500 levels or else FY 16 would have seen a Sensex drop of nearly 5000 points & @ 18%,double than what it actually did in the end

Here are some FY 16 Trend observations :

  • Sensex closed down 9.4%.It was down @ 18 % just around a month ago but smartly pulled back on record US $ 3b FPI Inflows in March 2016
  • Of the 30 Sensex Constituents,amusingly after a seven year itch perhaps ūüôā ¬†Reliance is the biggest gainer ¬†at 27% taking it’s Market Cap to US $ 49 b,next only to top TCS ¬†which ¬†despite a flat year retains Top Market Cap of US $ 73b !
  • Six Scrips,including all weather favourite TCS (Market Cap US $ 73b) have remained flat
  • Of the Four Banks,only HDFC Bank stays in the Green just about,the rest have lost lot of value from one third to one fifth
  • India Growth Proxy Larsen & Toubro has lost 26% Value
  • Four Pharma Majors have also dropped significantly from 13% to 28%
  • ¬†Three IT Bellweathers saw Wipro down 10%,Infy up 10% and TCS ¬†in between remaining flat
  • Of the Five Auto Majors,the two 2-wheelers are both in the green,two ,Maruti & M & M are flat while Tata Motors has lost 30% value
  • ¬†Three eternal FMCG Favorites,ITC,Asian Paints & HUL have held up
  • ¬† ¬†After a Steel Sector Battering past few years,Tata Steel is now catching it’s breath
  • All ¬†Five ¬†Non Bank PSUs continue to flounder ~ BHEL has lost half it’s Value follwed by ONGC down 30% ,Coal India down 19%,NTPC down 13% & Gail down 8%
  • Housing Finance Leader HDFC too has taken a beating of @ 16%
  • Controversial Adani Group’s Adani Ports is down 20%
  • Telecom Leader Bharti Airtel is down 11% despite getting a 4G breather as Reliance’s Jio ,expected to be a sector disruptive force,launch continues to be delayed but should be fully operative by FY 17 year end
  • read more

    SEBI keeps convicting Arun Jain of Polaris of Insider trading but what is the use !

    SEBI keeps convicting Arun Jain of Polaris of Insider trading but what is the use !

    For a 2000 Insider Trading Matter,SEBI had passed an October 9,2012 Order barring Arun Jain from Capital markets for Two years only to see SAT set aside this order on December 23,2013

    Now on November 24,2015 SEBI has again indicted Arun Jain for Insider Trading in 2008 and levied a Penalty of under Rs 2 crs on on him !  

    What’s the use !.. for two clear reasons….justice delayed is justice denied …. & he may appeal this too!

    Arun Jain keeps moving on in life !

    In 2014 ¬†he demerged Polaris’ Products division to Intellect Design Arena which listed last year in December 2014 at Rs 50 to Rs 60 levels and in a lack lustre 2015 has raced away ¬†six times to Rs 300 + earlier this week and closed at Rs 284 today

    In 2015 recently he,along with a few other shareholders sold their 53% stake in Polaris for Rs 1173 crs to US based Virtusa Corporation    in what he has described as the most important decision he has made in his life

    Who will continue having the last laugh !…..your guess would be right !

    Wow! A Full House NSE Training Fundamental Workshop !

    Wow! A Full House NSE Training Fundamental Workshop yesterday !

    Seems to get bigger & better every time !

    Did the first one on August 8,2015 and had blogged on it  as linked below

    Interesting Interaction at the NSE Equity Fundamental Training Workshop

    Sunday, August 16th, 2015

    Did this one too on “Interpretation of Financial Statements for Stock Analysis” under NSE’s Rapid Series at their NSE BKC Complex

    @ 30 Participants,both genders aged 22 to 58 from leading Broking Firms,Corporates,Banks and even Individuals who had come on dot and stayed till 8 pm ! expecting to learn how to read financial statements and  market dynamics to assess risks and opportunities in Indian Equities

    Common Question right from Manish Shah,who introduced himself ¬†to me in the lift going up to the Class ” How are the Markets Looking “? ~ “Where will the Sensex & Nifty head in the short term”?

    Had taken a Bull along ! really !…a smaller version of the Wall Street one….told the class I love four animals…Elephants (Lord Ganesha),Lions (My Zodiac Sign),Tortoise(Good Luck & of course Bulls (I’m always one!)….and you’ll always find them on my office desk !…in fact four bulls of various sizes !…and clients know my market view on simply seeing how the bulls are placed !…if facing them straight up ¬†(‚ÜĎ)¬† as they sit across me,I’m very bullish…if slanted (¬†‚ĀĄ¬†)towards them,I’m bullish…slant inclination reveals how much !….if a horizontal view (‚ÜĒ ) then indicates market will remain flat to rangebound and if the bulls face me vertically (‚Üst) I’m bearish !….and slant facing me shows intensity of being bearish !

    That got a few knowing laughs from the participants and set off the mood for the Workshop with humour being interspersed right through

    Interacted on the Sensex Dynamics right from base year 1978 and in the last 20 years from November 1,1995 to October 30,2015 when despite nearly half of the @ 4850 trading days saw the Sensex close negatively the Sensex ran up over 650% !…but is that enough!…..the Opportunities & Threats that were clearly visible during the years right from 1991 when Modern Reforms set in to 2001 when Markets had bottomed ¬†out on the ICE Age Melting to the Sharp drop in Interest rates from 14% to 7% in and around 2004 to post Lehman 2008 levels of 8000 in October 2008 and March 2009….showed them from current Sensex of 26657 how to assess fundamentally where we could be heading and the risks associated….discussed Passive Index Investing vs Active Investing and therefore the need for Fundamental Analysis and therefore the need to Interpret Financials & therefore the need to assess Value vs Price ¬†& therefore this Workshop ¬†! read more

    Value Protects in Inefficient & Wildly Swinging Scary Stock Markets

    Value will Protect in a Wildly Swinging Market !

    How Terribly Inefficient our Stock Markets are !

    The Share Price Swings in Small & Mid Caps can be equally exhilarating and devastating !…depends !

    And all this happens when the Sensex and Nifty move in a very narrow range !

    Down ! Down ! Down!

    Look at Amtek Auto’s Crash yesterday and continuing today !…all because the Exchanges announced that it will no longer be traded in the F & O Segment¬†

    It was Rs 141.50 on August 17,2015.Yesterday August 19,2015 it crashed  by nearly 40% and Rs 50 to hit a low of  Rs 78 before closing at Rs 89 !

    And this morning August 20,2015  it crashed another 40% to a low of Rs 50.70 before now recovering to Rs 67 levels !  

    So the fall in three days from a High of Rs 141.50 to a low of Rs 50.70 is 64% erosion of market cap ¬†from Rs 3100 crs to Rs 1100 crs in just one big Breath ! with High Volumes but low Delivery %….SCARY !

    And this is a Company where the Promoters Dhams & Their Companies own 48.98%,FPIs like Goldman Sachs & Macquarie hold 18.83%,Domestic Institutions like LIC hold 16.47% as on June 30,2015.

    There were over 46000 shareholders on this date.Spare a thought for them !…and for those who were long in F & O !

    …and Spare a Curse for those Broking Houses and FPIs who recommended this Scrip !

    Did not all know that the Group is struggling with over Rs 25000 crs in debt !….Wise after the Event !¬†

     

    Date

    Open

    High

    Low

    Close

    WAP

    No. of 
    Shares

    No. of 
    Trades

    Total Turnover

    % Deli. Qty to Traded Qty

    17/08/15

    135.00

    141.50

    127.55

    133.10

    133.54

    11,27,928

    15,415

    15,06,28,023

    17.63

    18/08/15

    133.25

    134.25

    127.40

    128.55

    129.54

    5,32,507

    5,649

    6,89,83,199

    23.42

    19/08/15

    126.90

    126.90

    78.00

    89.00

    100.86

    35,47,065

    26,846

    35,77,46,778

    36.40

    Look at Stampede Capital  !

    Rs 650 two days ago after an all time high of Rs 800 on August 6,2015 and down on two consecutive lower circuits of 20% yesterday at Rs 494 and even today to Rs 406 on BSE !….CRAZY !…and SCARY!….just over 2700 shareholders,one being Superstar Amitabh Bacchan (entered a year and a half ago picking up One Cr shares at Rs 88 & similar at ¬†Rs 110 levels), at June 30,2015 in what is clearly a highly controlled scrip

    Look at Ansal Buildwell ! Big Up & Down Swings in three days ! 

    Clearly Insider trading Involved or can the long positions be defended as aggressive risk taking based in favourable anticipation of a Supreme Court Judgement that was announced yesterday on the Ansal Brothers for the Uphaar Cinema Hall Tragedy that took 59 lives 18 years ago in a devastating Fire !

    On August 17,2015 the Share Price was Rs 123.On August 18,2015,just a day before Supreme Court Order the Price flared to Rs 148.30.Yesterday it closed up on upper circuit at Rs 163.10 ! as Supreme Court announced merely a Fine of Rs 60 crores on the Brothers and no Jail Sentence !….and today it’s on lower circuit at Rs 146.80 nearing noon !…and the rise was being justified as Market Cap just @ Rs 100 crs and land bank value worth Rs 10000 crs ! ¬† ¬† ¬† read more

    Interesting Interaction with Market Doyens Deenaben Mehta & Ramesh Damani

    Last Evening interacted with Ramesh Damani ….glad to have caught up with him after awhile…..he presented historical evidence of Global Bull Runs where Indices have zoomed 5x and 6 x in as quick time as 5 years and the biggest of all being 21 x by Nikkei…. says we have commenced one in India from Sensex 17500 levels in August 2013

    Rolling on his thought I asked him that at 28000 currently we are at only 0.6x two years down! so would he hazard a guess where we would be in a few years and would that then make even the passive Index Investing a good if not great Wealth Creation Approach for the next few years

    In lighter vein he stated that he had said 50000! at a Phuket get together organised by Tata Mutual Fund and yes Index Investing would be wise too

    I would say ~ Well look at it this way ! From 17500 to 28000 in two years is @ 25% CAGR on the Sensex and if we keep this up for the next three years we would have crossed 50000 by 2018…..Our Sensex has returned 17% CAGR since inception over 30 years ago though it’s performance has been lower ¬†and erratic in lesser periods of 5 and 10 years.

    Oh by the way Ramesh asserts that Direct Equity first and Index Funds next is the way to go and not Equity Schemes of ¬†Mutual Funds….am completely in sync with him on this

    His pet theme is Pharmaceuticals & ¬†the Digital Story & ¬†those who support E-Commerce Boom like Logistics Players….does not like PSU Banks even at Book or below…gives a thumbs up to Technology & FMCG going forward

    Met Deenaben & Asitbhai Mehta too….she’s a pioneering lady in Indian Broking and ¬†Asitbhai & her are a well respected couple in the field ….owe them at least a ¬†great dinner now for Deenaben proclaiming among 50 present including Pradip Shah(IndAsia),Dilip Piramal(VIP) and Y Trivedi(Reliance) ¬†that I should not be the one asking questions but instead be up there answering them on Wealth Creation through Indian Equities !

    Deenaben you’re too sweet ! thank you for the lovely compliment ! hope you did not see me blush !

    ūüôā Her take on the Sensex going forward is quite straightforward and humorous ! “See BJP has 282 Lok Sabha Seats and multiply by 1000 we are at ¬†28200 levels…NDA Coalition has 330 seats so I’m looking now at 33000!”….can’t argue with such funda logic !

    ūüėÄ Definitely owe Deenaben & Asitbhai a lovely dinner ¬†and before Sensex reaches 33000 !

    Oh! almost forgot ! as we were leaving,a relatively young gentleman ¬†walks up to me and says ” Sir,I’m a great fan of your blog.It’s one of the best !”…told him to interact through responses on blogposts as I could not recollect the name he gave as being one who has responded before read more

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